January 25, 2011, 10:38 AM

Paid search spending projected to grow up to 20% in 2011

Higher paid click costs and demand will help drive the increase, Efficient Frontier says.

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Paid search spending will increase 15% to 20% in 2011, according to projections issued by Efficient Frontier, a digital marketing technology and services provider. The firm says increased demand for paid search and rising paid search costs will drive the spending growth. The firm attributes much of the 23% increase last year in search engine marketing spending to the increasing costs of pay-per-click advertising.

The company bases its analysis on an index of the firm’s search engine marketing clients operating in the retail, travel, finance and automotive sectors, among others. Paid search spending by retailers during the fourth quarter increased 18% year over year. The firm attributes the increase to higher costs and increased advertising demand.

Display advertising and advertising within social media also proved strong in 2010, Efficient Frontier says. The company says Google’s DoubleClick Ad Exchange, the search engine’s display ad program, collected about 70% of advertisers’ display spending. The report also says ad spending within Facebook increased during 2010 but did not disclose specific growth data.

“Advertisers seem to be signaling that the economy is turning around by increasing their marketing spend across search, display and Facebook to respond to consumer demand,” says David Karnstedt, president and CEO of Efficient Frontier. “We see 2011 as a great opportunity for marketers to manage their online campaigns more holistically across the various channels.”

Google took paid search market share from the now-combined Yahoo and Bing engines during the fourth quarter, according to research released earlier this month by SearchIgnite, a paid search optimization company. SearchIgnite says Google captured 82.6% of the paid search ad market versus 17.4% for Yahoo and Bing during the quarter. During Q3 the comparable split was 80.2% and 19.8%. Efficient Frontier expects Bing will gain share in 2011 as advertisers realize a better return on investment from the search engine. Bing became the search engine on Yahoo sites last summer as part of an agreement between Yahoo Inc., which phased out its own search technology, and Bing parent Microsoft Corp.

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